Why you should file taxes even if you don’t owe money
Don’t you want free money? It may be the most ridiculous question ever, but it’s one that local and national governments probably ask when they have stimulus funds, rebates and other payments that end up going nowhere because the recipient never filed a tax return.
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These opportunities are the number one reason you should always file a return every year, even if you are out of work, didn’t make enough wages or live solely on Social Security (or in a state where they don’t tax those earnings).
“If you don’t file, you can’t collect what is essentially free money on the table,” said Jefferson Public Radio in an article noting how many Californians missed out on a constant stream of stimulus payments sent out by the state in 2022, and all because they didn’t get the paperwork in on time. State governments use tax returns and the information on them (often including banking info) to process those payments. If you don’t file, there’s no record of you for the processing system to pull from.
California tax board representative Andrew LePage also clarified for the outlet that anyone can file a state tax return any year, even if there was no income brought in from work (this applies to other states, as well). He suggested doing so for free with 1040 EZ forms and the IRS Free File system that walks you through all the steps to complete the task.
But it’s not just stimulus payments — there are other financial incentives you may be missing out on if you don’t file your taxes:
Inflation Reduction Act Rebates & Credits
Passed in August 2022, the Biden Administration’s sweeping Inflation Reduction Act is a $739 billion dollar package that offers financial incentives for clean energy upgrades that are implemented beginning this year. This includes up to $7,500 in tax credits for electric vehicles and a 30% tax credit for installing a solar roof.
Related: California Will Offer a Rebate on Electric Bikes in 2023 – Here’s How to Claim It
Earned Income Tax Credit
You may also be eligible for the earned income tax credit (EITC) if you earned $53,057 or less in 2022 ($59,187 for couples filing jointly). The EITC ranges from $560 to $6,935 depending on your filing status and how many children you claim on your tax return. Use the EITC Assistant on IRS.gov to determine your eligibility.
Child Tax Credit or Credit for Other Dependents
If you have qualifying children under the age of 18 and meet other criteria, you may also be eligible for the child tax credit or credit for other dependents. This includes people who have:
Dependent children who are age 18 or older at the end of 2022.
Parents or other qualifying individuals they support.
Though the expanded child tax credit that was available during the economic hardship of the pandemic has now expired, the standard thresholds remain intact.
Child Tax Credit: IRS Issues Important Reminder and 4 More Before Tax Season
Learn: How To File Your Taxes If You Got Married in 2022
Education Credits
You could be eligible for the American opportunity tax credit or the lifetime learning credit. To be eligible, you, your spouse or your dependent must have been a student enrolled at least half time for one academic period. You may qualify even if you don’t owe taxes. Use Form 8863, Education Credits to claim the credit when filing your tax return.
Josephine Nesbit contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: The No. 1 Reason To File Taxes Even if You Don’t Owe Money
